Tag: Hurricane Maria

A man holding an umbrella stands in front of damage caused by Hurricane Maria.

Over 13,000 Hurricane Maria Insurance Claims Remain Open

It’s been over a year since Hurricane Maria ravaged Puerto Rico, but the island is still far from a full recovery, due in large part to the continued non-cooperation of the insurance industry. Puerto Ricans have been forced to close down their businesses, drain their savings, and/or resign to living and working in buildings with structural damage because they have not received the insurance payments necessary to make repairs.

Despite plenty of time to handle claims, insurance companies in Puerto Rico have been slow to act, leaving at least 13,600 insurance claims still open.

Insurance Companies are Disregarding the Law

Under Puerto Rico law, insurance claims must be completed and processed within 90 days unless there are extenuating circumstances. While companies did receive a large number of claims in the aftermath of Hurricane Maria, they made insufficient effort to promptly handle them. Puerto Rico’s Commissioner of Insurance levied fines against numerous insurance companies in March of this year for failing to resolve claims in a timely manner. Despite over $2 million in fines, insurance companies still aren’t picking up the pace when processing claims.

Reinsurance in Puerto Rico Lengthens the Claim Process

Much of the insurance market in Puerto Rico is ceded to foreign reinsurers. While this helps prevent insolvency by spreading out the risk, it also adds an extra step into the already lengthy and complicated insurance claims process. Reinsurers often have to approve payments on claims, but most of them are in no hurry to pay out. When natural disasters strike, insurance companies stand to pay billions of dollars on claim payouts under their insurance contracts

What Can Policyholders Do?

Policyholders who regularly pay their premiums deserve full protection under their policies. Insurance companies have no right to unreasonably delay or withhold payments. Policyholders struggling with their insurance companies can file a lawsuit with the help of an experienced insurance lawyer.

Raizner Law Can Help

Puerto Rico must not be forgotten. The insurance lawyers at Raizner Law are proud to help Puerto Rican business owners with their Hurricane Maria insurance claims. We understand the island is facing desperate times and are working tirelessly to help policyholders get what they rightfully deserve under their policies. Call us today to schedule a free consultation to discuss your case.

Puerto Rico’s Power Grid

Nearly A Year After Hurricane Maria, Puerto Rico’s Power Grid Still Failing

When Hurricane Maria ravaged Puerto Rico on September 20, 2017, few realized how long lasting the devastation would be. It’s been over ten months, and power has still not been completely restored to the island, making it the longest power blackout in U.S. history. Officials are projecting repairs will be completed by the end of August 2018, but experts believe the repairs will not hold up against another Category 4 hurricane.

According to Puerto Rico’s Commissioner of Public Safety, Hector Pesquera, “The grid is there, but the grid isn’t there. It’s teetering.” Mr. Pesquera warned that the grid is so fragile, even if it was hit by only a Category 1 hurricane, the island would probably lose power.

The country has been desperately trying to complete repairs, and has awarded over one billion dollars in contracts to electric companies to rebuild the power grid. Despite this, thousands of Puerto Ricans remain without power, and generators are still powering vital infrastructure buildings including hospitals and police departments. For those Puerto Ricans that do have power, it is often fleeting. All it takes is a blown transformer or a snapped line for the power to go out again.

Puerto Rico’s fragile power grid has many worried about the 2018 Hurricane Season. This season is estimated to be similar to the 2017 season, meaning the island could easily see another storm that undoes the currently incomplete repair work done on the power grid since Hurricane Maria.

Unfortunately, a fragile power grid isn’t the only thing slowing down the island’s recovery. Insurance companies have been extremely slow to process and pay out on valid claims. This means many businesses cannot conduct repairs, often leading to additional lost income and further property damage.

Get Help With You Hurricane Maria Insurance Claim

Raizner Law is now evaluating commercial property claims in Puerto Rico. There is no upfront cost for working with us, and our consultations are free. We can help you understand your legal rights. We’ve achieved significant wins against some of the largest insurers in the world, and we can help you too.

Reinsurance Issues In Puerto Rico After Hurricane Maria

Practically every insurance company utilizes reinsurance to pass on the risk of claims to other insurance companies, or reinsurers. Reinsurance is basically insurance for insurance companies. In principle, the practice of reinsuring risk should help policyholders get their rightful payments without fear that the insurance company will become insolvent. However, in practice, reinsurers are typically foreign based companies that have no incentive to expediently investigate or pay claims. Most primary insurance companies in Puerto Rico cede the vast majority of the liability from their insurance policies to reinsurers. Since Hurricane Maria, insurers have been so slow to act that Puerto Rico’s Commissioner of Insurance has levied over $2 million in fines to insurers who are delaying the processing and closing of claims.

The Power of Maria

Hurricane Maria was the most powerful storm to hit Puerto Rico in almost 100 years, and it came right on the tail of Hurricane Irma, which had already knocked out power on parts of the island. The island faces billions of dollars of damage and is still, eight months later, not fully recovered. Sadly, with the trend over the last 35 years of increased natural disasters more storms like Maria are to be expected. The problem of reinsurer recalcitrance after natural disasters is not going away.

The Reinsurance Traffic Jam After Hurricane Maria

Many business and commercial buildings were damaged by Maria, and thousands of business policyholders filed claims with the insurer they received their policy from, only to find their insurer had ceded the vast majority of their coverage to a reinsurer. While there is nothing unique about that process, the way the insurance market is structured in Puerto Rico has created a traffic jam preventing insurance capital from flowing back into the economy. Here’s why: the insurance market in Puerto Rico is dominated by thinly capitalized domestic insurers who ceded almost all of their risk to European reinsurance companies. But the primary obligation to inspect properties and handle claims falls to these marginally capitalized primary insurers, some of which are nothing more than fronting entities. Given the vast numbers of claims filed after Maria, these domestic insurers lack the resources and expertise to handle the volume of claims they are being presented with, and many continue to do absolutely nothing with those claims.

Meanwhile, in the United Kingdom, German, Switzerland and elsewhere, the reinsurers who bear the vast majority of the risk on Maria claims are simply watching, waiting, and investing money they should be paying out to rebuild Puerto Rico. The reinsurer generally doesn’t have an obligation to pay until the primary insurer completes its investigation and requests payment; and the primary insurers don’t have the resources to accomplish these basic tasks.

The policy holder now has two companies either unmotivated or incapable of paying out on claims. Recalcitrant, slow paying insurance companies are causing policyholders additional economic hardship in a time when it matters the most. Without prompt payouts some businesses are unable to make the repairs necessary to rebuild and reopen.

Know Your Rights

Recalcitrant reinsurers have been a huge issue in Puerto Rico in the aftermath of Hurricane Maria. There are many ways recalcitrant insurers can slow down the claims process. They have every motivation to do so: most profits for an insurance or a reinsurance company come from the “float,” meaning the cash difference between premiums and claim payouts. Insurers invest the float, and make money on their investments. Even though the insurers are being fined for their wrongful conduct, it is still cheaper for them to pay the fines than to pay the claims. This is a gross violation of the legal rights of the insured. Under Puerto Rico’s insurance laws, policyholders have the right to have their claims handled in a timely manner. Policyholders in Puerto Rico can report abuses by their insurance company to the Commissioner of Insurance. Once reported, the Commissioner of Insurance will investigate these claims and levy fines if the insurance company is found to be acting in bad faith.

Hurricane Maria

Puerto Rico’s Commissioner of Insurance Fines Insurance Companies For Unnecessary Delays After Hurricane Maria

For the island of Puerto Rico, recovering after Hurricane Maria has been incredibly difficult. In the six months since the hurricane ravaged the island, millions of Puerto Ricans have struggled to rebuild among an island-wide power outage, scarcity of clean drinking water, and slow response from insurance companies. However, Puerto Rico’s Commissioner of Insurance has made it clear that insurance companies will not be able to shirk their duties.

Last month, Commissioner of Insurance Javier Rivera issued a whopping 2,587 violation orders to six different insurers. Under Puerto Rican law, insurers are expected to handle claims promptly and in good faith. If a policyholder in Puerto Rico does not agree with an insurance company’s determination of their claim, they can request an investigation by the Commissioner of Insurance. These investigations have already illustrated a widespread issue of unfair dealings on behalf of the insurance companies.

To address this dishonest behavior, the violation orders also assessed fines to the insurers. The Commissioner of Insurance has issued over $2 million in fines to insurers for unnecessarily delaying processing Hurricane Maria claims.

Insurers Acting In Bad Faith

Insurance companies are first and foremost businesses. So when natural disasters occur, insurance companies face millions of dollars in claims payouts. Most companies are not in a rush to pay out, and in fact many will use bad faith tactics to limit or completely deny payouts. Insurance companies try to limit payouts to save on their bottom lines, but this is not just morally wrong – it is also illegal. Policyholders that pay their premiums regularly deserve full coverage under their policies delivered in a reasonable timeframe.

Know Your Rights After Hurricane Maria

Even under the best circumstances, rebuilding after a natural disaster is challenging. After Hurricane Maria, property owners faced substantial hurdles from the lack of electricity and damage to the island’s highways. Many property owners are still facing significant issues, but dishonest insurance companies shouldn’t be one. Puerto Rico’s Insurance Code provides numerous protections for policyholders, but insurance companies often count on policyholders being unaware of their rights. In Puerto Rico, insurers are expected to resolve claims in a 90-day claims window unless there are extenuating circumstances. Failing to meet his deadline can result in fines like the ones issued by the Commissioner of Insurance.

Business Interruption Claims

Business Interruption Claims After Hurricane Maria

After any natural disaster, businesses don’t just face property damage; they also suffer economic damages from lost business. It can take a long time for businesses to resume operations after a natural disaster, and in the case of Hurricane Maria, many Puerto Rican businesses are still not operating. To help protect against these financial losses that come after natural disasters, many policyholders choose to purchase business interruption insurance.

What Is Business Interruption Insurance?

Business interruption insurance (also called business income insurance) is a type of insurance coverage that compensates the policyholder for the loss of income a business suffers after a disaster such as a fire, hailstorm, or hurricane. This coverage can cover income lost while the business was closed during a natural disaster and while the business is closed for rebuilding and repairing property damage from the disaster.

How Is Business Interruption Insurance Calculated?

When a policyholder files a business interruption claim, a thorough investigation should take place to properly calculate all of the losses endured by the business. The investigation will include an examination of financial statements such as a profit and loss report, along with the business’s history, and the number of employees, among other things. The insurance company will estimate the profits that would have been earned had the business been open based on the business’s history and other factors. The insurance company will then total and estimate the expenses a business regularly incurs, and the expenses the business incurs as a result of its closure such as moving to a temporary location. These totaled amounts should then be paid out to the policyholder to cover the entire financial loss due to the business’s closure.

Business Interruption Claims From Hurricane Maria Will Be Complex

Because Hurricane Maria destroyed the Puerto Rico’s electrical grid, downed most of the communication systems, and damaged many of the island’s highways, businesses were unable to rebuild and reopen for many months – some still remain inoperable. The losses from business interruption could be in the millions for insurance companies, and they will do everything in their power to limit claim payouts. Insurance companies often underestimate the cost of different expenses in order to help minimize claims.

Insurance companies have already faced extensive fines from the Commissioner of Insurance of Puerto Rico for unnecessarily delaying claims, but it is likely they will continue to drag their feet in paying out Hurricane Maria claims.